The Pivot Point Calculator is used daily by many successful traders to determine the key support and resistance levels where they can expect a price reaction.
You can download a free Pivot Point Calculator from a few web sites from the net by doing a simple search on the search engine of your choice.
However, I would like to use a pivot point calculator that I can customize according to the currency pair like the exact trading. I also want to identify additional pivot levels for reference.
A Microsoft Excel spreadsheet lets you easily create your own pivot point calculator. (Or you can download a copy of the one listed in the resource box below if you wish).
The formula for creating pivot points should be based on 4 statistics from your forex charting software. All you need is these values that can be obtained by looking at yesterday’s candle on a daily chart:
The main image of your pivot point calculator is the central pivot point. This value is obtained by combining high, low and nearest figures together and dividing by a total of 3 That’s it! You now have your central pivot point.
This pivot point now gives you the basis to calculate other levels like R1, R2, S1 and S2.
Since the distance between these levels can be significant enough at times, many traders put medium levels in their charts and refer to them as M1, M2, M3 and M4. They are located as follows:
- M1 – between S1 and S2
- M2 – between S2 and Central Pivot Point
- M3 – Between Central Pivot Point and R1
- M4 – between R1 and R2
Other level formulas are:
S1: (Central Pivot Point X2) Minus High
S2: Central pivot point minus (R1 minus S1)
R1: (Central pivot point x 2) minus low
R2: (Central pivot point minus S1) plus R1
Once these levels are calculated it is easy to place M levels in your pivot point calculator.
M1: S1 minus S2 divided by 2
M2: Central pivot point divided by minus S1 2
M3: R1 minus the center divided by pivot point 2
M4: And 2 minus R and 1 divided by 2
The resource box below contains a link to a spreadsheet set up for the six major currency pairs. I use this pivot point calculator as part of my preparation for the daily trading session.
I just call my daily chart, hovering my mouse over yesterday’s candle which automatically gives me a popup window showing high, low, closed and free values showing
I then just type them into the appropriate cell of the spreadsheet and all the pivot points are automatically calculated for me.
I then inserted horizontal lines to mark the original pivot layers on the 15 minute chart. This enables you to see the general area of activity for the day.
Sometimes the price exceeds the average range of the day and exceeds R2 or S2. In the spreadsheet below, additional pivot levels are calculated to provide some guidance for this national business day.
Pivot Point is one of the pricing tools to determine where the potential is and where it is likely to stall. Use the formulas above to create your own Pivot Point Calculator or use the free download below.